Kenneth Olsen, who died at 84 on Sunday, was a natural disruptor in the early days of computing. At Digital Equipment Corp., Olsen’s minicomputers undercut the costs of IBM’s mainframe computers and carved out a role for smaller, less capable machines.
But his own company fell victim to disruption itself as it failed to deal with the personal computer revolution, which undercut the minicomputer industry. Still, he will be remembered as a pioneer of the computer industry and as the leader of DEC, which he ran for 35 years. His company was one of the first tech firms to get venture capital.
Olsen’s own career is an example of both daring insights and failed vision. At DEC, his company launched PDP minicomputers that a young Bill Gates trained on. Many of the facets of DEC’s VAX, Alpha chips and DECnet network technology became foundations for today’s information technology industry.
DEC became a giant alongside IBM, with more than 125,000 employees at one point. But it lost its way in the PC era. In 1977, Olsen famously predicted that “there is no reason for any individual to have a computer in their home.” (He insisted the quote was taken out of context and he meant that he could not see a day when computers ran people’s lives). At the time, Apple was just getting started.
But DEC’s huge infrastructure for building minicomputers did not serve it well in the low-cost PC era. The company was acquired by Compaq Computer, a spawn of the PC clone era, for $9.6 billion in 1998.
DEC’s technology lives on. The company created high-performance, low-power StrongARM chips in a bid to beat Intel in low-power portable markets. Today, that’s a huge business for Marvell, which calls the chips XScale. Those chips are now the brains of a wide array of mobile devices such as eBook readers.
Born in Bridgeport, Conn., he learned electronics in the Navy and then got engineering degrees from the Massachusetts Institute of Technology. He co-founded DEC in 1957 with Harlan Anderson, thanks to $70,000 in funding from American Research and Development, an early venture capital firm. Since Olsen, like IBM’s Thomas Watson, was a pioneer, almost every major decision he made had consequences for decades in the entire tech industry.
Based in Maynard, Mass., DEC grew up in a state of constant combat with IBM. So it isn’t surprising that the company’s structure mirrored IBM’s. DEC made everything itself in the “vertically integrated” business model. In a period of rapid change, (such as the introduction of Apple’s iPhone in the beginning of the smartphone era), the vertical integration model made a lot of sense. But at some point, the industry shifted to an emphasis on low costs and horizontal integration, where each company only handled a slice of the task.
The divide between the vertical and horizontal companies was a geographic one. As Annalee Saxenian pointed out in the book Regional Advantage, DEC’s vertical structure spread to other companies in Boston’s Route 128 region. But in Silicon Valley, horizontal companies such as Intel took root. As the horizontal model triumphed, so did Silicon Valley. By contrast, Boston’s prominence in technology slipped away.
IBM has adapted to the new horizontal era by shedding most of its hardware businesses and focusing on software, chips and services. Apple remains one of the few vertically integrated companies that is thriving.
Dan Bricklin, co-creator of the original (VisiCalc) spreadsheet and DEC alumni, mourned Olsen with the tweet: “Ken Olsen is in the elite club of tech founders w/Gates & Jobs, and set the stage for them. What he did we take for granted today.”
Olsen was inducted into the Computer History Museum Hall of Fellows in 1996 and got a National Medal of Technology in 1993.
“An inventor, scientist, and entrepreneur, Ken Olsen is one of the true pioneers of the computing industry,” said Microsoft chairman Bill Gates in a letter to Gordon College of Wenham, Mass., in 2008. Gates said that Olsen was a major influence in his life. Gates and Paul Allen used the DEC PDP-10 minicomputer to create the first version of their BASIC programming language, which became the foundation of Microsoft, which would eventually be part of the PC revolution that undercut DEC.